Guest Post: They’re Coming For Your Savings

Tyler Durden's picture




 

Submitted by John Rubino via The Dollar Collapse blog,

Another of history’s many lessons is that governments under pressure become thieves. And today’s governments are under a lot of pressure.

Before we look at the coming wave of asset confiscations, let’s stroll through some notable episodes of the past, just to make the point that government theft of private wealth is actually pretty common.

• Ancient Rome had a rule called “proscription” that allowed the government to execute and then confiscate the assets of anyone found guilty of “crimes against the state.” After the death of Julius Caesar in 44 BC, three men, Mark Anthony, Lepidus, and Caesar’s adopted son Octavian, formed a group they called the Second Triumvirate and divided the Empire between them. But two rivals, Brutus and Cassius, formed an army with which they planned to take the Empire for themselves. The Triumvirate needed money to fund an army of its own, and decided the best way to raise it was by kicking the proscription process into overdrive. They drew up a list of several hundred wealthy Romans, accused them of crimes, executed them and took their property.

• In the mid-1530s, English king Henry VIII was short of funds, so he seized the country’s monasteries and claimed their property and income for the Crown. As historian G. J. Meyer tells it in The Tudors: The Complete Story of England’s Most Notorious Dynasty:

“By April fat trunks were being hauled into London filled with gold and silver plate, jewelry, and other treasures accumulated by the monasteries over the centuries. With them came money from the sale of church bells, lead stripped from the roofs of monastic buildings, and livestock, furnishings, and equipment. Some of the confiscated land was sold – enough to bring in £30,000 – and what was not sold generated tens of thousands of pounds in annual rents. The longer the confiscations continued, the smaller the possibility of their ever being reversed or even stopped from going further. The money was spent almost as quickly as it flooded in – so quickly that any attempt to restore the monasteries to what they had been before the suppression would have meant financial ruin for the Crown. Nor would those involved in the work of the suppression … ever be willing to part with what they were skimming off for themselves.”

• Soon after the French Revolution in 1789, the new government confiscated lands and other property of the Catholic Church and used the proceeds to back a new form of paper currency called assignats. The resulting money printing binge quickly spun out of control, resulting in hyperinflation and the rise of Napoleon.

• During the US Civil War, Congress passed laws confiscating property used for “insurrectionary purposes” and of citizens generally engaged in rebellion.

• In 1933, in the depths of the Great Depression, president Franklin Roosevelt banned the private ownership of gold and ordered US citizens to turn in their gold. Those who did were paid in paper dollars at the then current rate of $20.67 per ounce. Once the confiscation was complete, the dollar was devalued to $35 per ounce of gold, effectively stealing 70 percent of the wealth of those who surrendered their gold.

• In 1942, after entering World War II, the US moved all Japanese citizens within its borders to concentration camps and sold off their property. The detainees were released in 1945, given $25 and a train ticket home – without being reimbursed for their losses.

Since the 2008 financial crisis, various kinds of capital controls and asset confiscations have become common. A few examples:

• Iceland required that firms seeking to invest abroad get permission from the central bank and that individual Icelanders get government authorization to buy foreign currency or travel overseas.

• Greece pulled funds directly from bank and brokerage accounts of suspected tax evaders, without prior notice or judicial due process.

• Argentina banned the purchase of U.S. dollars for personal savings and required banks to make loans in pesos at rates considerably below the true inflation rate.

• The US Fed proposed that money market funds be allowed to limit withdrawals of customer cash in times of market stress.

• Cyprus, a eurozone country, responded to a series of bank failures by confiscating 47.5% of domestic bank accounts over €100,000.

• Poland in September responded to a budgetary shortfall by confiscating the assets of the country’s private pension funds without offering any compensation.

• Spain was recently revealed to have looted its largest public pension fund, the Social Security Reserve Fund, by ordering it to use its cash to buy Spanish government bonds. Currently 90% percent of the €65 billion fund had been invested in Spanish sovereign paper, leaving the fund’s beneficiaries dependent on future governments’ ability to manage their finances.

Now for the big one, reported by Automatic Earth on Saturday October 12:

The IMF Proposes A 10% Supertax On All Eurozone Household Savings
This is a story that should raise an eyebrow or two on every single face in Europe, and beyond. I saw the first bits of it on a Belgian site named Express.be, whose writers in turn had stumbled upon an article in French newspaper Le Figaro, whose writer Jean-Pierre Robin had leafed through a brand new IMF report (yes, there are certain linguistic advantages in being Dutch, Canadian AND Québecois). In the report, the IMF talks about a proposal to tax everybody’s savings, in the Eurozone. Looks like they just need to figure out by how much.

 

The IMF, I’m following Mr. Robin here, addresses the issue of the sustainability of the debt levels of developed nations, Europe, US, Japan, which today are on average 110% of GDP, or 35% more than in 2007. Such debt levels are unprecedented, other than right after the world wars. So, the Fund reasons, it’s time for radical solutions.

 

The IMF refers to a few studies, like one from 1990 by Barry Eichengreen on historical precedents, one from April 2013 by Saxo Bank chief economist Steen Jakobsen, who saw a 10% general asset tax as needed to repair government debt levels, and one by German economist Stefan Bach, who concluded that if all Germans owning more than €250,000, representing €2.95 trillion in wealth, were “supertaxed” on their assets at a 3.4% rate, the government could collect €100 billion, or 4% of GDP.

 

French investor site monfinancier.com talks about people close to the Elysée government discussing how a 17% supertax on all French savings over €100,000 would clear all government debt. The site is not the only voice to mention that raising “normal” taxes on either individuals or corporations is no longer viable, since it would risk plunging various economies into recession or depression.

 

Here’s what the October 2013 IMF report, entitled Fiscal Monitor : Taxing Times, literally says on the topic, in the chapter called:

Taxing Our Way Out Of – Or Into? – Trouble
The sharp deterioration of the public finances in many countries has revived interest in a capital levy, a one-off tax on private wealth, as an exceptional measure to restore debt sustainability. (1) The appeal is that such a tax, if it is implemented before avoidance is possible, and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair).

 

There have been illustrious supporters, including Pigou, Ricardo, Schumpeter, and, until he changed his mind, Keynes. The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away (these, in turn, are a particular form of wealth tax on bondholders that also falls on non-residents).

It should probably be obvious that there is one key sentence here, one which explains why the IMF is seriously considering the capital levy (supertax) option, even if it’s presented as hypothetical:

 

The appeal is that such a tax, if it is implemented before avoidance is possible, and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair).

 

It all hangs on the IMF’s notion – or hope – that it can be implemented by stealth, before people have the chance to put their money somewhere else (and let’s assume they’re not thinking of digging in backyards, and leave tax havens alone for now). Also, that after the initial blow, people will accept the tax because they are confident it’s a one-time only thing. And finally, that a sense of justice will prevail among a population, a substantial part of whom will have little, if anything, left to tax.

Some thoughts
Will more countries introduce capital controls or asset confiscations in the next few years? Duh, of course. Debt levels are unmanageable, so they have to be lowered. And there are only three ways to do it: deflationary collapse that wipes out the debt through default, inflation that wipes out the debt by destroying the world’s major currencies, or stealing enough private sector wealth to reset the clock. Option one – depression – is political poison so will be avoided at all costs. Option two is being tried and is failing because the deflationary effect of trillions of dollars of bad debt more or less equals the inflationary impact of trillions of dollars of new currency.

That just leaves door number three, demonize the successful and take what they’ve accumulated. Recall from the historical list that opened this post that governments like to pick on members of society who 1) have lots of money and 2) have lots of enemies or can easily be framed for crimes. This time around it will be “the rich” who are living well at the expense of the rest of us. The trick will be to define “rich” down far enough to make possible the confiscation of middle-class IRAs and 401(K)s, since that’s where the real money is.

Interesting that the build-up to asset confiscation is coinciding with a coordinated take-down of gold and silver, the two assets that will be hardest to steal when the time comes.

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Sun, 10/13/2013 - 12:42 | 4050137 vortmax
vortmax's picture

What savings?

Sun, 10/13/2013 - 13:02 | 4050194 Mototard at Large
Mototard at Large's picture

It is not just cash savings, it is value of any sort that you hold in a house, 401K, RRSP etc,

See The Savers versus the Takers: Potential Social Unrest

 

http://www.brokenmirrors.ca/?p=124

Sun, 10/13/2013 - 13:21 | 4050274 CaptainSpaulding
CaptainSpaulding's picture

What house?  What 401k?

Sun, 10/13/2013 - 13:54 | 4050403 bank guy in Brussels
bank guy in Brussels's picture

Article above repeats a common mistake, claiming that FDR's gold confiscation took away 70% of value ... actually it was just over 40%

Executive order 6102 ... signed on 5 April 1933 ... Here are the maths:

When it took US $20.67 to buy an ounce of gold, then 1 dollar was worth .0483 ounces of gold

When it took US $35.00 to buy an ounce of gold, then 1 dollar was worth .0285 ounces of gold

So the dollar would buy .0198 ounces less of gold than the earlier quantity of .0483 ounces ... in other words, 40.9% less (Take 40.9% of 483 and you get 198)

Of course Americans in their 'land of freedom', just having won the right to drink back, after 14 years of Taliban-style religious fanatic insane 'Prohibition' of alcohol, then could not buy gold again until the 1970s

Sun, 10/13/2013 - 14:53 | 4050618 Anglo Hondo
Anglo Hondo's picture

Or take 70% of 285 and you get 199.  Depends on which way you look at it.

 

Sun, 10/13/2013 - 16:10 | 4050835 Scarlett
Scarlett's picture

Is this why bitcoin is rallying?

Sun, 10/13/2013 - 21:28 | 4051613 philipat
philipat's picture

Here's another radical solution. STOP SPENDING!!!!

Sun, 10/13/2013 - 21:56 | 4051680 mjcOH1
mjcOH1's picture

Last time I was in the market for a home I looked at several owned by generation Me who had not a dime of equity in the property after having on it for 30+ years.  And yes, those crazy fuckers are retiring now.   The Free Shit Army is about to get an influx of a few tens of millions geriatric lefties.    What could go wrong?

Sun, 10/13/2013 - 22:20 | 4051743 boogerbently
boogerbently's picture

I'm thinking, instead of killing a few rich guys and taking their money, kill a bunch of poor "free shit" losers and save GENERATIONS of lost expense.

Sun, 10/13/2013 - 16:21 | 4050859 freelearner
freelearner's picture

Sure, you could say that gold appreciated by 69% relative to dollars, or that dollars depreciated 41% relative to gold.  But these are not interchangeable percentages, and it would be incorrect to say that dollars fell by 69%.

Sun, 10/13/2013 - 16:08 | 4050770 all-priced-in
all-priced-in's picture

So if you earned $1.20 an hour or $.02 a minute --

It would have taken you 1,033.5 minutes of work to earn enough to buy an ounce of gold (at $20.67).

 

After the gov revalued the dollar to $35 per ounce of gold - at $.02 per minute it would have taken you 1,750 minutes.

 

That is 716.5 minutes  or 716.5/1033.5 = 69.33% longer

 

Seems like if you must work 69% longer to buy the same amount than they did in fact steal 69% from you?

 

But if you just took the  $20.67 you could buy .59 of an ounce of gold @ $35 an ounce

So you would have 41% less gold.

Just think how much better would you feel if they only cheated you out of 41% rather than 69%. /sarc/

 

 

 

 

 

 

 

Sun, 10/13/2013 - 23:02 | 4051816 hidingfromhelis
hidingfromhelis's picture

Maths are hard, but I see they still teach it in Belgium.

Sun, 10/13/2013 - 14:08 | 4050460 W74
W74's picture

Houses are going to be a big one.  It won't matter to the thieves how much they're "worth".  The Zydokomuna plan is to throw us all off our land and turn us into neo-feudal rent serfs.

Sun, 10/13/2013 - 14:19 | 4050507 W74
W74's picture

Oops, looks like the resident Hasbara troll has arrived.  Only one of you guys has been coming around recently.  Been getting stretched thin policing the internet for your overlords?

Sun, 10/13/2013 - 14:11 | 4050475 Rentier
Rentier's picture

Only works if you agree to take the home equity loan...if you stupid enough will then you get what you get.

Mon, 10/14/2013 - 02:14 | 4052015 Midas
Midas's picture

When you do what you did, you get what you got.

Sun, 10/13/2013 - 22:06 | 4051705 Buck Johnson
Buck Johnson's picture

And the govt. has been hinting about having 401k's be required to invest in treasuries.  I see soon this will be a requirement.

Mon, 10/14/2013 - 04:15 | 4052088 Bankrupt from B...
Bankrupt from Belgium's picture

and if you have assets in shares / bonds / a home and only a little cash the only way to pay the tax (read theft) is to sell something.  One of the problems will be that many others will be in the same situation and doing the same thing......

 

Sun, 10/13/2013 - 13:27 | 4050290 orez65
orez65's picture

"What savings?"

Speak for yourself shithead!

Some of us have saved and not pissed it away like you.

Sun, 10/13/2013 - 13:41 | 4050359 oddjob
oddjob's picture

Great foresight saving in paper, shitforbrains.

Sun, 10/13/2013 - 13:56 | 4050411 Jumbotron
Jumbotron's picture

AAhhhh......beat me to his beating.

Exactly right......so he saved up worthless pieces of paper backed up by the worthless notion of the full faith and credit of the USA. 

And for you gold bugs.....they're gonna get your gold too.....by coercion, taxation, and gunpoint if they have to.

Pensions......Social Security........HHAHAHAHAHAHAH....  Wwoooohooo....LOL !

The only way you're going to get your country back is with lead and copper.

Good luck with that.

Sun, 10/13/2013 - 14:07 | 4050455 W74
W74's picture

I think he was referring to his tragic boating accident a couple months back.  Vortmax lost everything, I felt really bad for the guy when I heard about it.

Sun, 10/13/2013 - 18:24 | 4051133 RaceToTheBottom
RaceToTheBottom's picture

I don't think the gov is going to fall for the boating accident shtick.

Mon, 10/14/2013 - 08:59 | 4052356 N2OJoe
N2OJoe's picture

Boat reciepts save fortunes.

Sun, 10/13/2013 - 15:34 | 4050738 ebworthen
ebworthen's picture

"Pride goes before destruction, And a haughty spirit before stumbling."

Sun, 10/13/2013 - 17:44 | 4051044 Bangin7GramRocks
Bangin7GramRocks's picture

I'm all for them confiscating the wealth of the Catholic Church. That treasure was accumulated by duping people with tall tales of something called "hell". Total bullshit. Strip them clean and split the proceeds with the 50,000 men that were raped by those monsters!

Sun, 10/13/2013 - 12:43 | 4050139 W74
W74's picture

Why are they coming for MY savings?  The eternal enemy has plenty, most of it made through usurious money-changing, illegal dealings, and uncouth patronage.  But of course it is they of whom I speak who will come.  Let them.  Many will die.

Sun, 10/13/2013 - 13:01 | 4050189 knukles
knukles's picture

Yes, as in Rome, take the Lord Blankfiends and JP Morons, for they ahs the lota and lots of the stuff.
And that would be sooooo popular with the peasantry.
Then claim redistribution as the EBT Spice keeps flowing.

Methinks trying that here at home right now might just prove a tad unpopular (taxing savings) what with the recent shenanigans in da district.

IhopeIhopeIhope

Sun, 10/13/2013 - 13:16 | 4050254 Buckaroo Banzai
Buckaroo Banzai's picture

They would love to print their way out of this. Unfortunately, the Chinese would greatly prefer deflation to inflation. And they have nuclear weapons.

Nope, it's going to be increased taxes combined with "emergency measures" like bail-ins and forced conversion of retirement plans.

Sun, 10/13/2013 - 13:26 | 4050292 seek
seek's picture

They're already printing their way out of this, but it's still not enough! The printed dollars are simply making balance sheets look better for banks, but not fixing debt, so they was more as usual.

What should be concerning is that should these taxes happen, then some portion of the outstanding debt gets paid off -- meaning the principle is handed back to those holding the debt. I have to imagine these confications are being urged by parties that want the principle back now, rather than later. My guess is it's because they know the next wave of inflation will devalue their investment if they don't pull out ahead of it, and since they're pushing for this, it means high inflation is within their planning timeframe.

Sun, 10/13/2013 - 14:05 | 4050446 W74
W74's picture

Sorry to break this to you guys, but while I hope nobody gets stolen from, if they're going to steal from anyone it might as well be boomers.

I know no one here asked for it, but as a whole....boomers fucking asked for for it.

I already understood, probably before I was an adult and looking at my paychecks as a teenager, I already understood that I'd probably never see those SS, Medicare, or FICA taxes used for my benefit.

Sun, 10/13/2013 - 14:14 | 4050496 centerline
centerline's picture

Even 20 years ago the commercials and ads about retirement savings left me feeling like I was seriously missing something.  Funny how cognative dissonance feels when you realize that is what is you are experiencing.  Shit, my whole adult life has been one big cog dis trip... which I must say has been a real bitch.

Yeah, the boomers played right into this.  Karma is a bitch, isn't it - not just for greed, but turning a blind eye too.

Sun, 10/13/2013 - 15:04 | 4050651 Diogenes
Diogenes's picture

"I already understood, after my parents raised me, educated me, and while I was living in their basement, that the easiest way for me to own my own home and get some money was to throw them under the bus and take their stuff".

Sun, 10/13/2013 - 15:49 | 4050785 W74
W74's picture

That's not what I said at all.  I don't think even they knew how much decline America would see during their lifetimes, and I think few understoond how poorly they were stewarding their freedoms.

Mon, 10/14/2013 - 07:47 | 4052211 boogerbently
boogerbently's picture

I wonder if we sounded as naive as you when we predicted the end of America during the Viet Nam era.

Your type of ignorance is the hardest group to stomach, of the ZH crowd.

Whaaaaaa, the govt is stealing our money.......but it's OK to steal boomers money, because they are to blame for all the worlds ills.

Without ever accepting the fact that your logic places the blame for the recent DOUBLING of the deficit on YOU.

Why didn't you DO something?

Your whining kids will be throwing their parents under the bus in 30 years during the next "great depression".

I'd stick with the crucifying of the "free shit" crowd, If I were you. You'll sound less uninformed.

 

Sun, 10/13/2013 - 14:05 | 4050447 centerline
centerline's picture

+1 BB.  Writing has been on the wall for quite some time.  No one wants to believe it though.  Fucking world is being liquidated.  The collapse is masked by Central Bank actions - not stopped.

Sun, 10/13/2013 - 12:44 | 4050142 ZippyBananaPants
ZippyBananaPants's picture

Exactly, I'm spending everything so they will have nothing to take!

Sun, 10/13/2013 - 22:11 | 4051721 Jumbotron
Jumbotron's picture

"Exactly, I'm spending everything so they will have nothing to take!"

 

NO NO NO !!!!!   That's EXACTLY what the motherfuckers want you to do.  Be a mindless, all consuming locust.  Keep that money flowing around (debt based note....I know)

But TAKE your money out of the system and starve the beast AND load up on EVERY SINGLE GOVERMENT PROGRAM out there.  Become the poison pill in the putrid gut of the beast.  So what if they take some of your fiat paper.  TAKE MORE BACK FROM THE BEAST in goverment handouts. 

BE THE POISON INSIDE THE OUROBORUS (the snake or dragon eating itself)   https://en.wikipedia.org/wiki/Ouroboros

It's time for REAL guerilla warfare.....economic style.

 

 

Sun, 10/13/2013 - 12:45 | 4050148 frenchie
frenchie's picture

forgot to add what Soviets did to Eastern Europe as well...

Sun, 10/13/2013 - 12:57 | 4050180 rwe2late
rwe2late's picture

and the US in Iraq,

and NATO in Libya.

Sun, 10/13/2013 - 13:02 | 4050195 knukles
knukles's picture

And the Federalies in America
And Californians in Lalaland

Sun, 10/13/2013 - 12:47 | 4050151 andycrazn
andycrazn's picture

my savings is the accumulation of debt. il let em have it for free

Sun, 10/13/2013 - 12:58 | 4050153 lolmao500
lolmao500's picture

Obamabots reaction : well of course they are! *rolls eyes*

Maybe they'll start doing like the Soviets and imprison anyone who they think has gold... if they arrested you and you got no gold to give them, you were fucked. But if you have gold, don't give it too quickly or they will not believe you and say you have more stashed away... but then don't wait too long either to cough it up or you could kick the bucket... remember you're not just in prison, they torture you while you're there. If the Soviet scenario happened in America, a lot of people would be doomed to die in prison... like many in the Soviet Union did.

Sun, 10/13/2013 - 15:07 | 4050659 Diogenes
Diogenes's picture

Not to mention Guantanamo Bay. If they can arrest them and hold them indefinitely with no trial, no proof, and get away with it they can do it to you.

Sun, 10/13/2013 - 12:51 | 4050158 MiltonFriedmans...
MiltonFriedmansNightmare's picture

You didn't save that!

Sun, 10/13/2013 - 12:52 | 4050161 buzzardsluck
buzzardsluck's picture

and when haven't governments been thieves?

Sun, 10/13/2013 - 13:58 | 4050430 Jumbotron
Jumbotron's picture

But who elected the thieves ?

Karma's a bitch.  You stole this land from the reds.......and built it on the unpaid or underpaid sweat of the blacks and browns and yellows.

Now you bitch about government thievery.

That's rich.

Sun, 10/13/2013 - 14:35 | 4050565 buyingsterling
buyingsterling's picture

Almost every country 'stole it's land' from some indigenous people. And the idea that the country was built on the sweat of slave labor is a joke. Did they build all the factories and roads? And I wasn't aware that 'brown' (latino) people were ever slaves. Grow up and graduate from high school.

Sun, 10/13/2013 - 22:12 | 4051730 Jumbotron
Jumbotron's picture

"And I wasn't aware that 'brown' (latino) people were ever slaves. Grow up and graduate from high school."

JEEZUS.....look around fool.....they're called "illegal immigrants"  The New Indentured Servant.  The New Slave.

Oh...and by the way.....I graduated high school in 1982 with honors.  And I have grown up to see what a lie America has been and is today.

So fuck you.

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